Crane NXT outlines high single-digit growth for U.S. currency in 2026 while expanding into detection technology markets

Earnings Call Insights: Crane NXT (CXT) Q3 2025

MANAGEMENT VIEW

* Aaron Saak, President, CEO & Director, opened with, “our third quarter performance was in line with our expectations with sales growing approximately 10% year-over-year and adjusted EPS of $1.28. Our strong free cash flow resulted in a conversion ratio of 115% in the quarter, which puts us on track for our full year target range of 90% to 110% conversion.”
* Saak highlighted robust momentum in the international currency business with “several new customer wins, including a prominent country in Latin America,” and pointed to 9 new denominations specifying micro-optics technology year-to-date.
* The CEO announced the acquisition of Antares Vision, stating, “In September, we signed an agreement to acquire Antares Vision, a global leader in detection, inspection and track and trace technologies for the life sciences and food & beverage sectors.”
* Saak provided updates on U.S. currency, referencing the Federal Reserve’s 2026 print order and “a significant increase in demand for higher denomination banknotes containing our advanced security features,” with expectations for this business to grow “in the high single digits next year.”
* Christina Cristiano, Senior VP & CFO, reported, “Sales were approximately $445 million, an increase of approximately 10% year-over-year, driven by the impact of acquisitions, favorable FX and continued strong performance in currency.”
* Cristiano also stated, “Adjusted segment operating profit margin of approximately 28% was up approximately 50 basis points year-over-year, driven by higher SAT volume and improved mix in currency. Free cash flow conversion was approximately 115% in the quarter.”

OUTLOOK

* Full year sales growth guidance was raised to a range of 9% to 11% from the previous 6% to 8%, reflecting strong currency performance, especially in SAT, partially offset by a reduced sales outlook for CPI.
* Adjusted segment operating profit margin guidance was updated to approximately 25% for the full year, down from the earlier range of 25.5% to 26.5%, due to lower CPI volumes and costs from increased international currency production.
* Adjusted EPS guidance was narrowed to $4 to $4.10 for the year.
* Initial 2026 commentary from management projects mid-single-digit core growth in SAT and flat to low single-digit growth in CPI, with service ARR in CPI expected to grow mid-single digits.
* Saak said, “we’re narrowing our full year EPS guidance to a range of $4 to $4.10.”

FINANCIAL RESULTS

* Sales for Q3 were reported as approximately $445 million, up 10% year-over-year; adjusted EPS was $1.28.
* Free cash flow conversion stood at 115% in the quarter, and net leverage at quarter-end was approximately 2.3x, expected to rise to 2.9x post-Antares Vision transaction.
* SAT sales were approximately $229 million, up 28% year-over-year, with core sales increasing 9%. SAT backlog saw approximately 20% organic growth year-over-year.
* CPI sales were approximately $216 million, down 4% year-over-year, though gaming posted double-digit growth, offset by vending declines.
* Adjusted segment operating profit margin was approximately 28% for Q3. CPI’s full year adjusted operating margin is projected between 29% and 30%.

Q&A

* Matt Summerville, D.A. Davidson & Co.: Asked about international currency backlog and capacity. Saak replied, “Some customers are wanting orders now shipped into '27...I wouldn't quite say...we're sold out for '26. I would say we are very confident in the backlog and the position it's put us in, in '26...we're taking it very seriously our role here of keeping governments fully loaded with their currency.”
* Bob Labick, CJS Securities: Inquired about vending softness in CPI. Saak explained, “this has just been ongoing order softness after the price increases that we enacted due to tariffs...we expect it to be down in Q4 as well. And it's just continuing delays of customers sweating the assets, pushing out the decisions to buy as we raise prices.”
* Damian Karas, UBS: Asked about U.S. currency redesigns. Saak stated, “The $10 program is just really on track...we're all ready mid next year to go in what I would just call full-scale production mode of the new $10 bill.”
* Robert Brooks, Northland Capital Markets: Questioned international currency sales drivers. Saak indicated, “it's a little bit of customers wanting the currency faster...we're getting more orders to fill the backlog that we're shipping and our sales funnel is incredibly strong.”
* Michael Pesendorfer, Baird: Asked about margin trajectory in CPI given service mix. Cristiano responded, “we have high confidence in our full year target of 29% to 30% margin for CPI. So continuing to have very disciplined operating execution even with the lower volumes that we're experiencing.”

SENTIMENT ANALYSIS

* Analysts showed a slightly positive but cautious tone, frequently probing on backlog sustainability, CPI softness, and margin preservation; their questions reflected close attention to macro risks and execution consistency.
* Management’s tone remained confident across both prepared remarks and Q&A, with Saak emphasizing, “we are very confident in the backlog and the position it's put us in, in '26...” and Cristiano highlighting disciplined execution, while noting headwinds.
* Compared to the previous quarter, the current call featured increased optimism regarding growth in international currency and the Antares Vision acquisition, but also a more prudent approach on CPI and guidance.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for sales growth increased to 9%-11% from the previous 6%-8%, while adjusted segment operating profit margin guidance was lowered to 25% from 25.5%-26.5%.
* Q3 sales grew 10% year-over-year versus Q2's 9%; adjusted EPS for Q3 was $1.28, up from $0.97 in Q2.
* Commentary on international currency backlog and customer wins was notably more bullish, with new wins and higher backlog compared to Q2.
* Management’s sentiment shifted from steady confidence in Q2 to increased optimism about SAT and the integration of new acquisitions, but more caution about CPI outlook.
* Analyst tone remained probing but focused more on operational execution in light of new strategic moves and backlog dynamics.

RISKS AND CONCERNS

* Management noted ongoing macroeconomic and tariff uncertainties, especially for CPI short-cycle businesses.
* Saak acknowledged, “we continue to manage the impact that tariffs and broader macroeconomic uncertainties are having, particularly in our CPI short-cycle businesses.”
* Vending remains a particular source of order softness, with order delays attributed to customer price sensitivity and asset longevity.
* The company is incurring additional costs to increase international currency production, impacting margins.

FINAL TAKEAWAY

Crane NXT reported solid Q3 results with strong momentum in currency and authentication technologies, highlighted by a substantial increase in international orders, a robust backlog, and the strategic acquisition of Antares Vision. The company raised its full year sales outlook and affirmed disciplined cost management, while maintaining a prudent approach in CPI amid ongoing macroeconomic headwinds. Management projects high single-digit growth in the U.S. currency segment for 2026 and expects to leverage recent investments and integration actions to drive long-term value and resilience across its portfolio.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/cxt/earnings/transcripts]

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